The Economics of Retention: Insights from Forbes, Business Insider, Steinway & Sons and The Natori CompanyMay 24, 2016 - by Jason Grunberg
Retail and publishing are the modern case studies on the conflicts of managing change.
While vastly unique in terms of product, these industries are quite similar in terms of challenges. Margins are low. Competition is fierce. Consumer habits are vastly different than just five years ago. Customer strategy is the modern battle ground where businesses in these verticals will either win or lose.
Sailthru partnered with Forbes to survey 300 retail and media leaders to better understand the state of customer strategy in terms of retention and acquisition. The first glance at the research was presented at this morning’s Retentionomics Forum in New York City followed by a panel featuring Forbes’ Bruce Rogers, Business Insider’s Andrew Sollinger, Steinway & Sons’ Darren Marshall and The Natori Company’s Ken Natori.
Those who missed the event can register here to receive an advanced copy of the research report. Here are a few key quotes from our panelists to support why increasing customer retention and decreasing customer churn need to shift into the limelight now.
“Money does grow on trees… referral trees.” – Andrew Sollinger
As a leading digital publisher, Business Insider leaders know that you’re failing if you’re not renewing customers. Their team watches email engagement “like a hawk” to determine if there are signs of disengagement that need to be addressed. To keep a customer-centric focus, readers and paid subscribers are brought in to monthly meetings so that all departments understand how customers consume content, what they want that they’re not getting, and to develop a true connection to actual, real audience members. Next up for Business Insider is moving from monitoring renewal rates to monitoring revenue renewal rate — after all you can only go up by measuring down(stream).
“We often look at what is happening. We need to look at why it’s happening.” – Darren Marshall
Steinway & Sons is a heritage, luxury brand. People don’t buy a new piano every year, so it’s critical that the company can acquire intelligently, convert quickly and retain over the long-term to create evangelists out of pianists. While their metrics that matter are tied to a classic funnel, Darren pushes his colleagues to put customers first to understand the why, not the what. He likens this to actors on a stage, stating that all too often businesses look at their marketing and customer engagement from “the stage out” rather than considering how audiences are consuming from the outside-in.
“We treat our best customers the worst, and our worst customers the best.” – Bruce Rogers
While what’s measured matters, people must be more than numbers. Bruce shared the story of a company that completely changed their culture simply by changing their vernacular. Units became experiences. Customer segments became people. All of a sudden a customer-centric culture emerged — far faster than one might expect. For organizations looking to change, but fearing the process, this is an ideal place to start. The push back on changes to customer data structures, enabling technology choices and customer strategy priorities will take place organically rather than feel forced.
“Return from our direct marketing was 9x higher from existing customers than from new acquisitions.” – Ken Natori
As we all know, proof is truth. The Natori Company is a 40-year-old brand name and is still run by the family matriarch. While this isn’t always the case, it’s certainly analogous to large enterprises run by the so-called “old guard” who aren’t digitally-savvy and perhaps not as data-fluent as their younger colleagues or upstart competitors. While Natori says that the company still focuses on acquisition, he started the panel by saying that he’ll be going to bat with the insights found in the Retentionomics research report to reconsider their strategy.
The bottom line is that retention reaps rewards, but to build a business case, benchmarks are needed. Sign up now to receive the Forbes research report in advance of general distribution!
—Jason Grunberg, Director of Content Marketing and PR